U.S. Securities and Exchange Commission
Litigation Release No. 23991 / November 17, 2017
Securities and Exchange Commission v. Capital Financial Partners, LLC et al., Civil Action No. 15-cv-11447-IT (D. Mass.)
United States of America v. Will D. Allen and Susan C. Daub, Case No. 15-mj-7095-JCB (D. Mass.)
SEC Obtains Final Judgments Against Defendants in Ponzi Scheme Involving Loans to Professional Athletes
The Securities and Exchange Commission today announced that, on November 17, 2017, the United States District Court for the District of Massachusetts entered a $15.7 million final judgment against a former professional football player and his co-defendants for defrauding investors in a Ponzi scheme case involving money raised to make loans to professional athletes.
The SEC's complaint, filed on April 1, 2015 alleged that defendants William D. Allen, Susan Daub, and related entities Capital Financial Partners, LLC, Capital Financial Partners Enterprises, LLC, and Capital Financial Holdings, LLC, raised almost $32 million from investors who were promised profits from loans to professional athletes. According to the complaint, defendants misled investors about the terms, circumstances, and even the existence of some of the loans. Defendants allegedly used only a portion of the funds raised to make the promised loans and instead used investor funds to pay personal expenses, such as charges at casinos and nightclubs, to fund other business ventures, or to repay other investors. The Commission obtained an asset freeze and other preliminary relief upon filing the complaint.
Allen and Daub pled guilty to related criminal charges in November 2016. On March 1, 2017, Allen and Daub were each sentenced to six years imprisonment and ordered to pay $16.8 million in restitution in the related criminal action.
The final judgment entered on November 17, 2017 permanently enjoins the Defendants from violating Section 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The judgement also requires them to pay disgorgement of ill-gotten gains of more than $15.7 million plus prejudgment interest. This disgorgement obligation will be deemed satisfied based on the restitution order in a related criminal action against Allen and Daub.
For further information, see press release number 2015-58 (April 7, 2015) and litigation release numbers 23286 (June 15, 2015), 23692 (November 22, 2016), and 23768 (March 3, 2017).